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DECREE 253/2026/NĐ-CP AND CIRCULAR 87/2026/TT-BTC – ENHANCING THE PERSONAL INCOME TAX POLICY

On 30 June 2026, the Government issued Decree No. 253/2026/NĐ-CP (“Decree 253”) guiding the implementation of the Law on Personal Income Tax No. 109/2025/QH15; at the same time, the Ministry of Finance issued Circular No. 87/2026/TT-BTC (“Circular 87”) guiding the implementation of the Decree. Both documents take effect from 1 July 2026 (except for certain provisions on income from business, and on wages and salaries of resident individuals under Circular 87, which apply from 1 January 2026).

This is the first time the Law on PIT has been comprehensively guided, replacing Circular 111/2013/TT-BTC that had been in use for more than 13 years, with broad impact on all enterprises that pay income. Some notable changes include:

1. Family circumstance deductions and dependants

2. New deductions from taxable income

  • Medical: domestic medical examination and treatment expenses within the health insurance list — deduction of up to VND 23 million/year.
  • Education: tuition expenses at domestic institutions — deduction of up to VND 24 million/year.
  • Retirement insurance: total maximum deduction of VND 3 million/month (including the portion contributed by the enterprise and the portion contributed by the employee).

=> Conditions: There must be invoices/documents recording the information of the taxpayer (or dependant), and the expenses must not be paid from any sponsorship or other insurance source. In addition, Decree 253 also provides that taxpayers having the above deductions must directly finalise tax with the tax authority.

=> Enterprises should inform their employees of the documentation requirements and the obligation to directly finalise tax when deductible expenses arise.

3. Clarification of tax policy on the transfer of shares and transactions relating to real estate

  • The Decree retains the PIT calculation method for the transfer of shares in both public companies and non-public joint-stock companies. Accordingly, PIT continues to be determined at 0.1% of the transfer price, instead of applying the 20% rate on taxable income as previously proposed.
  • In addition, the Decree provides that where an individual transfers 100% of the capital in a limited liability company or a private enterprise and the transaction is associated with real estate, such transaction is determined as a transfer of real estate for tax calculation purposes in accordance with regulations.

=> Enterprises and investors should note: it is necessary to assess the substance of the transaction when transferring an enterprise that owns real estate in order to correctly determine the PIT obligation.

4. Significant expansion of the scope of PIT-exempt income, creating additional incentive policies for taxpayers in certain specific sectors and activities.

  • Mid-shift meal allowance: cash payments of up to VND 1.2 million/person/month are tax-exempt; any amount in excess remains taxable income.
  • Overtime, night-shift pay and unused annual leave: tax-exempt if paid in accordance with labour law.
  • Severance and job-loss allowances: the portion paid in excess of the statutory level is also tax-exempt if provided for in the enterprise’s policies and regulations.
  • Incentives for high-tech personnel: PIT exemption for 05 years on income from wages and salaries of individuals who meet the conditions for working in the digital technology and high technology sectors.
  • Income from green finance and the carbon market: a number of tax-exempt income items are added, including income from the first transfer of certified greenhouse gas emission reductions, the transfer of carbon credits allocated to individuals, interest from green bonds, and income from the first transfer of green bonds after issuance.

5. Bonus shares and the Employee Stock Ownership Plan (ESOP)

PIT arises only upon the transfer of shares, comprising PIT on wages and salaries and PIT on securities transfer activities.

  • For income from wages and salaries: the securities company/custodian bank is responsible for monitoring the bonus shares and ESOP shares held by each individual and for withholding PIT at 10%. Individuals are responsible for declaring this income in their annual personal income tax finalisation dossier in accordance with current regulations.
  • For income from securities (including derivative securities): transfer price × 0.1%.

6. Income from digital assets — A completely NEW point

  • For the first time, digital assets (crypto, virtual assets, encrypted assets) are officially classified under the group of “other income” subject to PIT.
  • PIT = Transfer price × 0.1%
  • Other new types of income also give rise to obligations: .vn domain names, carbon credits, and vehicle number plates won at auction (tax rate of 5%).

7. Certain notes on PIT withholding and finalisation for income from wages and salaries

Decree 253 adjusts a number of applicable thresholds and further clarifies the regulations on PIT withholding and finalisation, specifically:

  • 10% tax withholding threshold: increased from VND 2 million to VND 5 million per payment for individuals who do not sign a labour contract or who sign a labour contract with a term of less than 3 months. For payments below this level, tax withholding is only carried out at the individual’s request.
  • Scope of application: the above tax withholding obligation also applies to payments made to individuals after the termination of their labour contract with the income-paying organisation.
  • Finalisation threshold: income from other sources not exceeding VND 15 million/month (on average) may be excluded from the income-paying organisation’s tax finalisation dossier filed on behalf of the individual, if such income has already been subject to tax withholding at the 10% rate.

Individuals who choose to directly finalise PIT with the tax authority must aggregate all income from wages and salaries arising during the year and the corresponding PIT amount already withheld.